Regional shoppers explored 2013 Regional snapshots: November 2013

Snapshot of Scottish shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months Shopper confidence is growing in Scotland ahead of most other regions across Britain The Scottish shopper increasingly wants a product from a country famous for the product type, for the product to provide quality assurance, and ideally for that product to be Scottish Confidence, attitude and opinion There is a more positive shopper outlook in Scotland than the British average: Although food price rises are expected, the proportion expecting prices to be much more expensive has fallen to 14% for this period compared to 23% for the same period 2012 This coincides with a rise in shoppers expecting to be better off (18% 2013 vs. 11% 2012), which is also ahead of the British average of 15% Drivers of product choice Provenance and assurance are key drivers of choice in Scotland: Scottish shoppers are more likely to claim it is worth paying a little extra for a product associated with the country of origin (30% vs. a British average of 20%) Scottish shoppers are also increasingly claiming that products with quality assurance standards are worth paying a little extra for (25% 2013 vs. 16% 2012) There has also been an increase in shoppers stating that it is worth paying more for locally produced products (53% 2013 vs. 41% 2012) Channel and store choice Although small in number, the use of Frozen Food Specialists as the main grocery shop has risen to 4% in 2013 compared with 1% for the same period 2012 Role of Promotions Particularly pertinent to Scottish shoppers is the type of promotions available, with just 36% stating they are extremely or very satisfied with the types available now compared to 45% for the same period in 2012. This also compares to a 2013 British average of 45% stating they are currently extremely or very satisfied with the types of promotions available Purchasing Behaviour Scottish shoppers like to support their local producers - 50% have bought locally produced products in the last month (vs. a British average of 39%) Branded manufacturers may be able to capitalise on the growing confidence in the region, as Scotland sees the highest proportion of shoppers (86%) buying well known brands in the last month (vs. a British average of 80%). This is alongside an increase in shoppers stating they will buy more well known brands over the next 12 months (9% 2013 vs. 5% 2012) Implications Scottish manufacturers are best placed to maximise the opportunity increased shopper confidence will bring. Scottish brands can pull on two key drivers of choice - the move towards more branded products and the desire for locally produced goods Use simple on-pack and at-fixture communication to highlight Scottish pride, patriotism and heritage Base: All main Scottish grocery shoppers. Jul–Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81

Snapshot of North East shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months Shopper confidence increases for some, however the focus on price and saving on groceries remains strong for the majority Hypermarkets are growing in popularity in the North East during these price focused times Confidence, attitude and opinion Despite a growing portion of shoppers in the North East believing they will be better off in the next 12 months (18% 2013 vs. 9% 2012), there remains a continued focus on price and savings for the majority The amount spent on groceries is the single most important factor for 66% of North East shoppers, the highest across the British regions, while a high proportion of those looking to save money on groceries will do so by buying lower cost products Drivers of product choice Although price is more likely to be a driver of product choice for shoppers in the North East versus other regions in Britain, brand equity is still strong for some: 31% of North East shoppers state that it is worth paying extra for a well known brand - this is a growing trend, up from 17% for the same period in 2012 and compares to a British average of 21% This indicates there is an intrinsic ‘value’ associated with well known brands for North East shoppers Channel and store choice There is an increased use of multiple channels in the North East, which is driven by a focus on price and a more savvy shopper. 82% of North East Shoppers bought from three or more channels in the last month (vs. a British average of 69%) One of the channels benefitting from this multichannel shopping are hypermarkets, which are more popular in the North East (25% use as main store vs. a British average of 15%), and have grown in use from 2012 to 2013 Role of Promotions Promotions are a higher influencer of store choice in the North East, making it particularly pertinent to ensure promotions are executed effectively here North East shoppers are more than satisfied with finding promotions in store, however just 42% are extremely or very satisfied with the promotion types available, this compares to 56% for the same period in 2012 and a 2013 British average of 45% Implications Drive the brand appreciating North East shopper, and the North East shoppers with a more positive economic outlook by communicating value and added benefits Ensuring standard and value private label goods are visible and available will appeal to many in the North East, while communicating the value of premium private label will help to position it in the same consideration set as branded variants Purchasing Behaviour North East shoppers seeking lower cost products is evident in their choice of private label goods: Premium private label purchasing has dropped to 55% in 2013 from 68% in 2012 At the same time there has been an upturn in purchasing of standard and value private label (23% 2013 vs. 13% 2012) Base: All main North East grocery shoppers. (Excludes Yorkshire and Humberside) Jul–Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81

Snapshot of Yorkshire and Humberside shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months A corner is being turned in shopper confidence Yorkshire and Humberside shoppers demand quality produce from their store, and the demand for organic grows Confidence, attitude and opinion Shoppers in Yorkshire and Humberside are cautiously turning a corner in confidence: There is an increase in shoppers expecting food prices to remain the same (15% 2013 vs. 10% 2012), and in shoppers expecting their own economic circumstances to remain the same (47% 2013 vs. 37% 2012) This is against a backdrop of a decrease in shoppers expecting to be worse off (37% 2013 vs. 51% 2012) Drivers of product choice Across the Northern regions price is more highly claimed as a driver of product choice, however, Yorkshire and Humberside shoppers are more likely to stretch their spend for organic This trend towards organic has grown in 2013. Organic is now worth paying a little extra for for 22% of shoppers in 2013 compared to just 13% in 2012 Role of Promotions There has been a decline in shopper satisfaction with the level of savings provided by promotions (9% extremely satisfied 2013 vs. 14% 2012) Alongside this there has been a rise in dissatisfaction with the types provided (13% not very satisfied 2013 vs. 7% 2012) Channel and store choice Yorkshire and Humberside shoppers are more likely than shoppers in other regions to use product quality as a driver to store, with product quality an extremely or very important factor in the choice of store for 82% of shoppers (vs. a British average of 76%) Implications Emphasising product quality in regional marketing activity can act as a driver to store in Yorkshire and Humberside Manufacturers need to communicate the importance of health, and the value of health, to head off a reduction in the purchasing of these types of products Yorkshire and Humberside shoppers are looking for deeper cuts than have been provided recently Purchasing Behaviour Yorkshire and Humberside shoppers claim to be cutting back on healthy eating products. 69% bought low fat/sugar/salt products in the last month, compared to 77% buying these product types for the same period 2012 Well known brands have seen an increase in purchasing across the same two periods (84% 2013 vs. 77% 2012) Base: All main Yorkshire and Humberside grocery shoppers. (Excludes North East) Jul–Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81

Snapshot of North West shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months Shopper confidence remains low, while the industry has work to do to rebuild trust Private label has an opportunity to build on recent growth by meeting the needs of the price conscious North West shopper Confidence, attitude and opinion Confidence is slowly being rebuilt: A small rise in shoppers expecting to be better off is countered with the North West having the highest percentage of shoppers expecting to be worse off in the next 12 months (46% vs. a British average of 40%) Drivers of product choice Although price is a high driver of product choice in the North, there are shoppers willing to pay a higher price for particular elements: 30% of shoppers state it is worth paying a little extra for added health benefits vs. a British average of 24% Innovative packaging also resonates as a driver to spend more with the North West shopper, with 16% claiming it is worth paying more for vs. a British average of 12% Channel and store choice North West shoppers have adopted, and will move in greater numbers towards discounters: This region sees the highest percentage currently buying from food discounters (57%), which is up from 46% from the same period 2012 This trend is expected to continue, with a significant proportion of shoppers (38%) stating that they will use food discounters more over the next 12 months compared to a British average of 31% Role of Promotions There has been a drop in satisfaction towards the type of promotions available (46% were extremely or very satisfied 2013 compared to 53% 2012) – could a return to mechanics more frequently used in 2012 help to satisfy the North Western Shopper and drive greater penetration for your brand? Implications Trust and confidence in the industry can be accelerated through greater transparency and communicating quality assurance By Highlighting the cost savings, retailers and manufacturers can demonstrate empathy with shoppers ongoing economic struggles in the region, which could help to build longer-lasting relationships with shoppers Using simple on pack and at fixture benefit led messaging would help to drive the more affluent shopper into added benefit products Purchasing Behaviour The North West is experiencing a drive towards private label. 77% of North West shoppers bought standard private label in the last month compared with 69% for the same period 2012 There has been a drop in purchasing environmentally sustainable products (41% 2013 vs. 47% 2012) Base: All main North West grocery shoppers. Jul–Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81

Snapshot of Wales shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months Confidence slowly returns, but the focus remains on price Discounters and private label have seen the biggest shifts in behaviour as a move towards lower cost channels is mirrored in making more low cost product choices Confidence, attitude and opinion Confidence is ebbing back into the Welsh shopper market, however a focus on price will remain for many: The percentage of shoppers expecting to be worse off in the next 12 months has dropped significantly, however with 42% still expecting to be worse off the focus on price will remain for many A significant proportion of Welsh shoppers plan to save money by buying lower quality products (33% vs. a British average of 23%) Drivers of product choice There has been little change in the drivers of product choice for Welsh shoppers in the last 12 months. Price is the most important factor for 46% of shoppers followed by quality with 17% Although small in number (3%), Wales has a higher proportion of shoppers stating that ethically produced or environmentally friendly credentials are the most important driver of product choice (this compares to a British average of just 1%) Role of Promotions Across the board there is a drop in satisfaction towards promotions in Wales, mirroring the trend we are seeing across the British regions: Fewer shoppers state they are satisfied with promotions now in Wales compared to the same period in 2012 for each of the following; the type of promotions available, ease of finding them, the level of savings, the stock of products on promotion and the types of product on promotion Channel and store choice Discounters have been benefitting, and will continue to benefit, from a shift to more price-conscious and savvy shopping behaviour in Wales: A food discounter is the main store for 13% of shoppers now compared to 7% for the same period in 2012 Wales also sees the highest percentage of shoppers claiming they will use more food discounters over the next 12 months (39% compared to a British average of 31%) Implications Consider a gradual shift in large store communication strategies to build in more added benefit and quality messaging (for retailers and manufacturers), to slowly shift focus from price, and be ahead of the curve as confidence and prosperity builds Are you currently trading with or targeting the discount channel? Increasing shopper demand and strong expansion plans mean discounters are now a prominent feature of the retail landscape – the case for suppliers to target or trade with the discount sector is more compelling than ever Purchasing Behaviour Cost reduction has been evident within private label in Wales. Shoppers are buying less premium private label, and more value private label: Just 57% of shoppers claim to have bought premium private label in 2013 compared to 72% for the same period in 2012 68% bought supermarkets lowest price own brands in 2013, up from 59% in 2012 Base: All main Walsh grocery shoppers. Jul–Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81

Snapshot of West Midland shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months The West Midlands is an optimistic region however retailers and manufacturers need to keep rebuilding trust with shoppers West Midlands shoppers are looking for, and buying, products that provide added health benefits Confidence, attitude and opinion The West Midlands remains one of the more optimistic regions in Britain, however retailer and manufacturer trust has dipped significantly: The West Midlands has the joint highest percentage of shoppers expecting to be better off in the next 12 months (20% vs. a British average of 15%) However, two significant reductions have come in trusting the industry: The number of shoppers trusting the industry to provide complete and clear information has dropped to 56% in 2013 compared to 66% in 2012, and to provide reasonable pay and conditions for their employees has dropped to 47% in 2013 vs. 59% in 2012. Both having significantly bigger drops in satisfaction compared to the British average Drivers of product choice Added ingredients to make a product healthier are a significantly higher driver of product choice in the West Midlands (34% compared to a British average of 27%) Role of Promotions The West Midlands is one of the few areas with a more positive outlook towards promotions: The West Midlands has a high proportion of shoppers (48%) stating that they are extremely or very satisfied with the level of savings provided by promotions, for example, compared to a British average of 41% Channel and store choice The West Midlands shopper places a greater emphasis on customer service than seen elsewhere in Britain: Customer service is an extremely important or very important driver of store choice for 61% of shoppers compared to a British average of 51%. This is also a growing trend having risen from 53% for the same period in 2012 Implications How can we maximise the opportunities presented by a growth in prosperity in the West Midlands? Firstly, rebuild trust. Ensure labeling is clear and concise for shoppers and ensure PR remains positive around corporate social responsibility issues Secondly, ensure retailers highlight key drivers of store choice. Ensure excellence in customer service programmes and actively promote and highlight service and assistance available in store Thirdly, ensure manufacturers highlight added benefit messaging on pack to aid the shoppers search for the products that provide these extra benefits Purchasing Behaviour Products with added benefits (such as added Omega 3, vitamins or minerals) can be expected to grow in the West Midlands: The West Midlands has the highest proportion of shoppers stating that they will buy more products with added health benefits in the next 12 months (64% compared to a British average of 47%), while we have already seen a growth in shoppers purchasing products that contribute to their 5 a day allocation (up to 53% 2013 from 44% 2012) Base: All main West Midlands grocery shoppers. Jul–Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81

Snapshot of East Midland shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months The East Midlands is experiencing a shift from premium to value within private label More East Midland shoppers are choosing to shop at farmers markets Confidence, attitude and opinion East Midland shoppers trust in retailers and manufacturers is recovering, however it is sitting below the levels achieved 12 months ago across a number of measures: 71% agreed strongly or slightly that the industry could be trusted to provide products of reasonable quality 2013 vs. 77% 2012. 68% agreed strongly or slightly that the industry could be trusted to provide products that were safe to eat or drink 2013 vs. 76% 2012 Drivers of product choice Use by / sell by date is a more important driver of product choice for the East Midlands shopper - it is important for 56% of shoppers compared to a British average of 47%. This is also a growing trend (just 44% stated it as important 2012) Has the drive for freshness fuelled the growth in the Farmers Market channel in this region? Role of Promotions As with many regions, shoppers in the East Midlands show a drop in satisfaction with the types of promotions available – just 39% claim to be satisfied with the type of promotions available now compared to 51% in 2012 Channel and store choice The East Midlands is seeing a steep rise in claimed shopping at farmers markets (17% 2013 vs. 11% 2012) The East Midland shopper is significantly more likely to state a loyalty card is a driver to store (47% of shoppers claim the use of a loyalty card is extremely or very important compared to a British average of 40%) Implications Retailers communicating quality and freshness of branded and premium private label products may help to retain shoppers that are considering moving into lower cost private label products in the next 12 months Manufacturers could reach more shoppers by taking part in loyalty scheme promotions in greater numbers, or by ensuring they are part of the direct mail communication to loyalty card holders in the East Midland region Purchasing Behaviour The East Midlands is experiencing a shift within private label: Supermarket premium private label purchasing is down to 57% in 2013 from 69% 2012 Alongside this there is a rise in shoppers that purchase both standard and value private label (19% 2013 vs. 10% 2012) Base: All main East Midlands grocery shoppers. Jul–Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81

Snapshot of East of England shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months Quality, assurance and local have a greater role to play in this region Trust in the industry to provide safe to eat products has reduced in the last 12 months for the East of England shopper Confidence, attitude and opinion East of England shoppers have significantly reduced their trust in retailers and manufacturers to provide products that are safe to eat, drink and use, dropping to 67% of shoppers trusting the industry on this issue now compared to 78% in 2012 The East of England, along with other regions with a high agricultural heritage, may need a greater level of quality assurance to return confidence to the market Drivers of product choice Quality has risen in importance as a driver of product choice over the last 12 months. 68% of shoppers in the East of England state quality is important in their product choice now compared to 61% for the same period in 2012 Role of Promotions 40% of shoppers are satisfied with the level of savings produced from promotions, compared to 48% for the same period 2012 - East of England shoppers are still looking for deep cuts in their promotions Channel and store choice Online is a popular channel in the East of England – 26% of shoppers have used the channel in the last month compared to a British average of 23% Implications Focus quality assurance messaging both above the line and in-store in greater quantities in regions with a higher agricultural heritage Local events supported with local press coverage would help raise awareness of measures being taken to restore trust Short to mid-term, increase the stock of locally sourced products to provide shoppers with local options Purchasing Behaviour East of England shoppers like to buy local – 51% of shoppers bought local produce in the last month compared to a British average of 39% Organic and sustainably sourced products are also more popular within this region compared to other British regions Base: All main East of England grocery shoppers. Jul–Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81

Snapshot of London shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months As confidence returns we can expect the London region to lead the shift to non-price attributes driving product choice London continues to be the heartland for organic food purchasing Confidence, attitude and opinion Shopper confidence is returning in the London region ahead of the national average, while there is evidence to support that London shoppers will be the first movers away from saving money to better quality products: London has a significant proportion of shoppers (40%) claiming the quality of products they buy is most important to them compared to a British Average of 35% At the same time we see the highest percentage of shoppers nationally (16%) saying they will improve the quality of the groceries they buy (compared to a British average of 12%) Drivers of product choice Although price is highly claimed as the most important driver of product choice (35%), London has the lowest proportion of shoppers claiming this compared to any other region and compared to a British average of 41% London shoppers hold considerably more equity in brands and health than shoppers in other parts of the country: 18% rate brands as extremely important drivers of product choice (vs. a British average of 11%) 40% rate health as extremely important (vs. a British average of 34%) Role of Promotions There have been significant drops in satisfaction levels with: The level of savings provided by promotions (38% 2013 vs. 46% 2012) The promotions in stock when the shopper wanted to buy them (37% 2013 vs. 45% 2012) Channel and store choice Online is anticipated to grow at a faster rate in London than in most regions. 17% claim they will use Online more in the next 12 months compared to a British average of 11% Implications Manufacturers have an opportunity to grow in London as confidence returns and the focus on price reduces – communicate health benefits and leverage brand messaging to attract the brand and health conscious London shopper Purchasing Behaviour A significant proportion of shoppers in London buy organic (33%), which has been consistent year on year – this compares to a British average of 22% Base: All main London grocery shoppers. Jul–Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81

Snapshot of South East shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months Despite less shoppers expecting to be better off confidence is returning slowly in the South East region The South East leads the way for online grocery shopping Confidence, attitude and opinion Confidence is slowly returning for shoppers in the South East as economic concerns begin to level off. The number believing their personal economic circumstances will be about the same as the previous year has increased (48% 2013 vs. 40% 2012) while the number believing they will be worse off has also dropped (39% 2013 vs. 46% 2012). These two measures offset the slight drop in shoppers expecting to be better off Retailers and manufacturers still have work to do to restore trust. There has been a significant drop over the last 12 months for the level of trust shoppers have in the industry to provide safe products, reasonable pay and conditions for employees, to support charities and to limit their environmental impact Drivers of product choice In line with the drop in trust to provide safe products, South East shoppers are looking for greater reassurance about the products they buy: 29% of shoppers believe it is worth paying a little extra for products with quality assurance standards now vs. 20% for the same period in 2012 Role of Promotions Promotions have declined as the most important factor in product choice – 5% of South East shoppers now rate promotions as the most important factor compared to 8% for the same period 2012 At the same time taste and smell of products has risen to become one of the five most important factors for 55% of shoppers compared to 47% in 2012 Channel and store choice The South East has the highest percentage of shoppers buying groceries online in the last month (28% vs. a British average of 23%) A significant proportion of shoppers in the South East are also claiming they will use online more over the next 12 months (15% vs. a British Average of 11%) Implications With the economic tide changing, shoppers’ willingness and ability to pay a little extra for quality assurance means manufacturers adhering to a trade standard would be best placed to gain market share, and help with the restoration of trust over the coming 12 months Branded manufacturers and premium private label brands could communicate the added taste or quality of their products to encourage shoppers to choose their products, or stop switching out of their products, in favour of lower priced variants Purchasing Behaviour 50% of South East shoppers are buying products from the local area compared to a British average of 39% At the same time there has been an increase across the last 12 months in shoppers buying any private label products (94% 2013 vs. 91% 2012) This private label increase has been led by an increase in standard (79% 2013 vs. 70% 2012) and value private label purchasing (64% 2013 vs. 61% 2012) Base: All main South East grocery shoppers. Jul–Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81

Snapshot of South West shoppers Shopper Barometer % of shoppers expecting to be better off in the next 12 months South West shoppers are in the middle of a move towards lower priced private label products Promotions will continue to have an important role to play in driving product choice in the South West Confidence, attitude and opinion Confidence in shoppers’ own economical situation is taking longer to restore in the South West versus other British regions 27% of South West shoppers plan to save money on groceries in the next 12 months by buying lower quality products (compared to a British average of 24%) Trust in the industry to support local farmers and suppliers has risen significantly in the last 12 months (54% agree strongly/slightly 2013 vs. 42% 2012) Drivers of product choice A high proportion of shoppers (51%) believe it is worth paying a little extra for locally produced products (vs. a British average of 44%) 29% of shoppers believe it is worth paying a little extra for products with quality assurance standards now vs. 19% for the same period 2012 Role of Promotions The South West has the highest share of shoppers (8%) stating that promotions are the most important consideration when deciding on products, while 73% state promotions are one of their top five considerations (vs. a British average of 68%) – as such particular attention should be paid to promotions in this region There has been a drop in satisfaction with the types of promotions available (37% satisfied 2013 vs. 48% 2012), and the ease of finding products on promotions (40% satisfied 2013 vs. 47% 2012) Channel and store choice Claimed food discounter usage has grown significantly during the last 12 months. 13% of shoppers now state a food discounter as their main store, compared to 3% for the same period 2012 Farmers markets continue to cement their strong position in the South West. 25% have bought from a farmers market in the last month, well above the British average of 16%, which is also an increase on the already high South West 2012 figure of 18% Purchasing Behaviour There has been a movement of shoppers towards buying lower cost products over the last 12 months in the South West: There has been an increase in shoppers buying standard and value private label (81% purchased standard 2013 vs. 76% 2012 and 64% purchased value 2013 vs. 61% 2012) At the same time there has been a decline in shoppers buying well known brands and premium private label (75% purchased well known brands 2013 vs. 82% 2012 and 60% purchased premium 2013 vs. 70% 2012) Implications Shoppers having difficultly finding products on promotion indicates an at fixture visibility issue: Are your promotions being communicated at fixture in a simple and consistent manner so shoppers can see them, find them, and hunt for them easily? Are there too many promotions or promotional materials at fixture leading to the shopper being unable to make out the relevant promotional item for them? Or is there an issue maintaining stock with promotional items, meaning the product is actually not there for the shopper to see? Base: All main South West grocery shoppers. Jul-Oct 2013 (where 2012 figure is quoted this is for Jul-Oct 2012) ©IGD 2009. Excludes slides 1-5, 79-81